Thinking about buying a second home? Let’s talk
Birmingham’s proximity to beautiful lakes, mountains and the Gulf of Mexico frequently leads to this question: “Should I buy a second home?” Consider asking yourself these key questions to help make the best decision.
► Can you afford it? Real estate is not a liquid asset, so you can’t count on being able to sell your home for a profit, or even break even. Calculate all the costs. Consider more than the actual purchase price when determining costs. You will also have to pay utilities, HOA or condo fees, property taxes, insurance and the cost of furnishing a new home, right down to the forks and knives. Have realistic expectations of rental income, and don’t count on the rental income. Don’t expect to get a bank loan based on having rental income to cover any debt. Also, renting out a vacation home incurs expenses. There will be costs to pay for a cleaning service between tenants, advertising expenses, repairs, maintenance and perhaps property management. If you are buying property that has been rented previously, ask for the last two to three years of rental income and expense history.
► How often will you really visit? Consider the travel time to get to and from your new vacation home. If you don’t plan to rent out your property, you want to make sure you will visit enough to make the investment worthwhile. For the amount you’ll spend on a vacation home, you can probably take several nice trips each year. Calculate the return on your investment. If owning a vacation home is part of your overall investment strategy, make sure it’s a wise decision. Estimate your returns and evaluate them alongside other uses for the same dollars.
Linscomb & Williams is a financial advisory firm of former practicing attorneys and certified public accountants offering fee-based investment management and financial planning services.
Established in 1971, the firm has more than 45 years of experience providing comprehensive financial advisement services to clients with diverse financial situations and needs. Linscomb & Williams strictly adheres to the fiduciary model: putting clients’ interests first, with no commissioned product sales, hidden fees or other conflicts of interest.
Sheri Robinson has been a Mountain Brook resident for more than 20 years. Sheri graduated from the University of Alabama at Birmingham with a degree in accounting. She is a Certified Public Accountant (CPA), a Certified Financial Planner (CFP) and Accredited Estate Planner (AEP). She is a member of the Financial Planning Association (FPA), and has held various leadership positions on the national level as well as being a past president of the North Alabama Chapter of the FPA. She is also a member of the Alabama Society of Certified Public Accountants and the Estate Planning Council of Birmingham.
For more information on Linscomb & Williams, call 868-3331, email Sheri at srobinson@linscomb-williams.com or visit linscomb-williams.com.
Recent Comments